The transaction values Jacksonville-based Lender Processing at $33.25 a share, representing 19% premium to the company’s 30-day closing average through May 22, the last trading day before buzz about a potential deal emerged. The deal marks just a 1.1% premium on Lender Processing’s Friday close at $32.89.

Fidelity National agreed to pay 50% of the buyout in common stock and 50% in cash. The transaction, which is expected to close during the fourth quarter, is subject to approval by both companies' shareholders as well as regulators.

“This combination will create a larger, broader, more diversified and recurring revenue base for FNF and makes us the nation's leading title insurance, mortgage technology and mortgage services provider,” William Foley, II, Fidelity’s chairman, said in a statement.

Foley said Fidelity has set a target of $100 million for cost synergies and is confident the company can meet or exceed that goal.

After the deal closes, Fidelity plans to combine its ServiceLink business with Lender Processing in a new holding company and then sell a 19% minority stake to private-equity firm Thomas H. Lee Partners for about $381 million in cash. Fidelity plans to keep an 81% stake in the new company.

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Shares of Lender Processing climbed above the deal value on Tuesday morning, recently trading at $33.98, up 3.34% on the day.

The agreement includes a “go-shop” period effective through July 7 that gives Lender Processing the chance to find an alternative buyout offer.

However, if Lender Processing backs out of the deal due to a superior proposal during that window, it must pay a break-up fee of about $36.25 million, or roughly 1.25% of the total equity value of $2.9 billion.

If Lender Processing fails to hold a shareholder meeting or terminates the deal after the “go-shop” period due to a superior proposal, it must then pay a break-up fee of $72.5 million, or 2.5% of the total deal value.

“As the mortgage industry continues to face increasing regulation, participants in the industry are seeking out those strategic partners who offer quality, comprehensive solutions, a strong balance sheet and a commitment to innovation," said Hugh Harris, the CEO of Lender Processing.

Shares of Fidelity National rallied 3.15% to $27.01 Tuesday morning.

Bank of America Merrill Lynch (BAC) and J.P. Morgan Chase (JPM) served as financial advisors to Fidelity on the deal and are also providing debt to finance the acquisition.